LOS BAÑOS, Philippines—A newly released issue of the Agriculture and Development Notes (ADN) series by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) reveals that while the ASEAN-China Free Trade Agreement (ACFTA) has significantly boosted overall regional commerce, its benefits for the agricultural sector remain unevenly distributed across Southeast Asian nations.
Titled "Trade Creation or Diversion? Assessing the ASEAN-China Free Trade Agreement's Uneven Impact on ASEAN Agricultural Trade," the ADN is co-authored by Mr. Paul Neilmer Feliciano, a program manager and economist at the Ateneo Policy Center, and Mr. Manuel Leonard Albis, an assistant professor at the University of the Philippines School of Statistics.
The publication details findings from research supported by SEARCA's Seed Fund for Research and Training (SFRT), a competitive grant program that provides start-up funds for projects contributing to regional agricultural and rural development.
The study traces the concentration of trade gains and the emergence of trade diversion to help focus policy on the necessary support systems for regional commerce. By pairing trade agreements with the right investments, market opportunities can more effectively foster improved livelihoods, stronger food systems, and more capable institutions. Such efforts are central to the target outcomes of SEARCA's 12th Five-Year Development Plan.
Since the ACFTA-Agreement on Trade in Goods (ACFTA-ATIG) took effect in 2004, total trade between ASEAN and the People's Republic of China (PRC) has seen a fourfold increase, rising from USD 213 billion to USD 863 billion by 2018. The authors note that agriculture remained a priority for the agreement, particularly through the Early Harvest Program (EHP), which mandated the immediate removal of tariffs on selected agricultural products. Consequently, trade in agricultural commodities surged nearly fivefold, reaching USD 68 billion by 2018.
Despite this overarching growth, the authors find that the ACFTA's impact varied significantly at the country level.
In the study, Vietnam emerged as the primary beneficiary, achieving what the researchers describe as "unparalleled" success. Vietnam stood out as the only nation to generate significantly more agricultural trade within the regional bloc while simultaneously and strongly expanding both exports to and imports from the rest of the world.
The study showed that Indonesia and Thailand also experienced substantial net trade creation, while Malaysia and the Philippines expanded their agricultural trade only by exporting to markets outside the ACFTA bloc. Conversely, net trade diversion effects were observed for Brunei Darussalam ,Cambodia, Lao PDR, and Myanmar.
To replicate Vietnam's success and maximize the benefits of free trade, Feliciano and Albis argue that ASEAN Member States require a comprehensive policy framework. This strategic approach should prioritize investments in technology such as mechanization, the development of infrastructure like farm-to-market roads and irrigation systems, and the provision of robust training and extension services to build human capital. The authors emphasize that a national agriculture blueprint is essential to create an overarching strategy encompassing research, development, and evidence-based regulations.
The study concludes that agriculture authorities should view free trade agreements as strategic policy instruments for expansion.
By establishing a strategic agriculture policy—supported by initiatives like the SEARCA SFRT that bridge the gap between research and practical pathways for growth—nations can create an enabling environment that allows them to aptly respond to structural changes and effectively capitalize on newly opened foreign markets.